If you got a better offer for
Malpractice Insurance, would you take it?
Some lawyers shouldn’t. Let me
explain.
Professional Liability policies
protect lawyers from lawsuits that come up from mistakes made during their
careers. For a claim to be covered, you
have to 1) learn of the error during the policy period and 2) have been
continuously covered since just before the error occurred. As long as you renew coverage year to year
without interruption, you’re covered.
But what happens if you retire?
If you’re a sole proprietor and you
retire and do not renew your policy, your coverage ends. You’ll be uninsured and the body of work you
created will be (as we say in the insurance biz) NAKED.
“But I could buy a Tail” you
say. Yes, you could.
A Tail (the correct term is
Extended Reporting Period Endorsement) extends the time you have available to
report claims to 1 year, 3 years, 5 years or for your lifetime. If you don’t purchase a tail, you’ll have 60
days to report any claims. After that,
you are no longer insured.
The cost of a Tail can be
expensive. What it will cost you is
written into your policy. It’s a
percentage of your last premium… 1 year, 100%; 3 years, 250%; 5 years, 400% and
lifetime, 500%. These percentages are
illustrative. Your percentages could be
different. Bottom line? Tails can be
expensive.
But some insurance companies have a
nice benefit which is WHY SOME LAWYERS
SHOULD NOT CHANGE INSURANCE COMPANIES… Some companies offer a FREE LIFETIME
TAIL. These companies offer a Free Tail
if 1) you retire completely from the practice of law, 2) you are 55 or older
and 3) you’ve been continuously insured with them for three continuous years or
more.
If you’ve started your career or
retirement is more than 5 years away or you’re one of those lawyers who plan to
die at their desks, then this essay really does not apply to you. But, if you are in the twilight of your
career and you are looking at different quotes, maybe you should throw them all
out and just renew what you have.
Do you have questions? Call fax or email me anytime and I’ll do my
best to answer your questions… you don’t have to be a client to get an answer.
Kevin P. Foley
PFT&K Insurance Brokers
T 877-414-2031
F 877-405-3025
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